The Tories’ chaotic Brexit has lost the trust of business – and jobs will go

Early summer, and Westminster politics is a glorified beach read. Will the former SAS (Reserve) hardman David Davis stay or go? How long can dogged Theresa May keep her job? And when will the pinstriped assassin Jacob Rees-Mogg strike next? Grab another drink, slap on the Soltan, and all shall be revealed on page 194. What larks! Yet away from parliament, and far from the tabloid front pages, a serious breach is opening up in British politics. Last week some of the most senior business leaders in Britain came out of a Brexit meeting at No 10, and promptly tore the prime minister to shreds. “We’re playing economics; [the politicians] are playing politics,” said Paul Drechsler, president of the bosses’ organisation, the Confederation of British Industry. “In the world of business, we’re frustrated. We’re angry.”

An extraordinary statement, especially from an executive invited to tea and biscuits with May. If supposedly tame industrialists now talk like this, you have to wonder what sounds come out of the feral lot.

Yet the CBI’s impatience is shared by many. Once the long-haul arm of the Tory movement, the Freight Transport Association lashed out at May last week for “playing chicken with crucial parts of the British economy and the livelihoods of … 7 million Britons”.

These are close friends of the Conservative party.As one senior representative of a leading business organisation says: “Over the past two years, most company bosses would never risk saying openly that Brexit is turning out to be a disaster, in case it scared off their best staff.” With fewer than 290 days before Britain formally leaves the EU, their caution is running out.

This is a far bigger story than the one on the front pages about who promised which amendment to which band of Tories. One of the fundamental relationships in the establishment is fracturing – and the consequences for government and economy could prove to be historic.

An iron rule of British politics is that the Conservatives mean business, and business means the Conservatives. Despite an early falling-out with Margaret Thatcher and a dalliance with Tony Blair, blue remains home corner for commercial companies and champions of cutting taxes and trimming red tape to a minimum. Yet in May’s two years as prime minister, business has either been cast as the enemy or relegated to a walk-on part. In that chaotic summer of 2016, as senior Tories stabbed each other in the back and themselves in the front, May was quick to grasp that many leave voters were sticking up two fingers at the British way of doing capitalism. Neither an ex-banker nor marinaded in Treasury culture, she happily blasted “unscrupulous bosses” and “corporate irresponsibility”. Among her aides was the enthusiastic leaver, Nick Timothy, whose masterplan was to use Brexit to win over working-class voters who had been chucked overboard by New Labour.

The EU Withdrawal Bill – once known as the Great Repeal Bill – is going through the House of Commons to repeal the 1972 European Communities Act and transpose all existing EU legislation into domestic UK law, which will avoid a ‘cliff-edge’ change on the day after we leave the EU.

Parts of the bill have been highly controversial, and MPs have tabled hundreds of amendments to try and change its wording, including a significant number of Conservative rebels. Some of the key controversies include its use of so-called Henry VIII powers, which will give government ministers the power to tweak the wording of laws to make sure they make sense in UK legislation – but those changes could take place without having to go through parliament. MPs have called this a “power grab” by the government. The government estimates around 800 to 1,000 measures called statutory instruments will be required to make sure the bill is applied correctly.

Other concerns include the government’s decision not to include the EU charter of fundamental rights in the law being transposed. Other amendments are attempts to affect the Brexit process, including legislating for a transitional period and giving MPs a binding meaningful vote on the deal secured by Theresa May, before the deal is finalised.

Take the all-important triggering of article 50: May announced it in her first conference speech as leader, just weeks after the referendum vote and before parliament had resumed. Forget about consulting industry and finance: she didn’t even give them notice.

After last summer’s election debacle, and Timothy’s exit, May’s new team set up a conciliatory business advisory council that meets in Downing Street every three months or so. A long way short of the Brexit business task force called for by the CBI and others, its rotating membership – one month WPP, the next Rolls-Royce – makes it almost useless as a forum for formal input. Unsurprisingly, it was after one of these council meetings that Drechsler exploded.

Ministers and aides try to calm the waters. Their efforts, while appreciated by people in business I have spoken to, are rendered void against the bungling and botching that marks the negotiations. The tens of billions taxpayers give business in subsidies and tax reliefs are now taken for granted. For as long as Brexit is treated by May first and foremost as a way to keep her own cabinet and party together, the private sector will remain frozen out. Anything else it would like – from a third runway at Heathrow to a proper industrial strategy – gets parked on the long list marked “any other business”.

Imagine you are a senior manager at a major carmaker. Over the past two years, you have been assured that you would continue to “operate within” the European single market. Except that turned into “frictionless” trade – which then became “as frictionless as possible”. Meanwhile, the cabinet dreams up “customs partnerships” and other unicorns destined only to be waved away by Michel Barnier – and Boris Johnson is wittering on about yet another bloody bridge. How are you meant to plan around any of that? The answer is that the worst-case scenarios your team drew up in 2016 are, by 2018, your base case.

No longer is it just banks and pharmaceutical firms looking overseas. Britain’s biggest car manufacturer, Jaguar Land Rover, warned this week it would shift production of its Discovery 4×4 from Solihull to EU member Slovakia. That can be explained away as focusing Midlands staff on making electric cars – but just last September, the firm said its presence in Slovakia was a “hedge” against Brexit uncertainty.

The problem this poses for the rest of us is very real and very easy to sum up. Among all the 28 members of the EU, the UK ranks second only to Ireland on its level of inward investment. As Kevin Farnsworth at the University of York points out, from Thatcher onwards, British governments have touted for capital investment from abroad. It’s why George Osborne cut corporation tax so low and went on tours of China and India. It’s also why the Bank of England governor, Mark Carney, says the UK relies on “the kindness of strangers”. That dependence has grown as Britain has lost more and more of its own businesses and become instead a branch-plant economy for the rest of the world. And that kindness is now being strained by a blundering Brexit. Soon the headlines will be not just about a few hundred jobs moving out of the City – but of firms scrapping their expansion plans, or factories shifting to Poland, or thousands of jobs going at a stroke of a pen.

It was always a rotten and unsafe model. The irony is, it is a Conservative government that now appears intent on tearing it down – with nothing to replace it. In place of a strategy, you get the panic that broke out in Downing Street when Nissan threatened to take its money elsewhere – resulting in a private meeting with the Japanese carmaker and a series of promises made in a secret “comfort letter”. This is no more an economic policy than a bunch of flowers bought at a service station is a Valentine’s present.

But then, this has been the decade in which the political and policymaking elite has inflicted upon itself wound after wound. First came the fiasco of austerity, and an economy that refused to bounce back as Osborne and Carney promised it would. Then came the Brexit referendum that Cameron claimed he had in the bag. And that has produced the slow dissolution of the Tory-corporate coalition central to contemporary British capitalism.

With all that as the background, why wouldn’t you opt for a bit of beach-reading escapism?

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